Peace Announces Budget Agreement

Mechanicsville, VA - If ever a time existed when the adage "Patience is a virtue" meant so much that time is now. Lawmakers reached an agreement late Friday on a new state budget. Formal action to adopt this agreement will occur on Monday in the Senate and Tuesday in the House of Delegates. Anticipated passage of $72 billion, two-year spending plan will end the unprecedented stalemate two weeks ahead of the commencement of the 2006-2008 financial calendar. "This agreement by the budget negotiators marks a new beginning for all Virginians and I am grateful for the support of my neighbors in the 97th District who supported my position to oppose $1 billion in new taxes. We can truly say that we held the line," said Del. Christopher K. Peace (R-Mechanicsville).

Holding up the process was a Senate Leadership proposal of imbedding taxes into an appropriations bill which many in the House deemed unconstitutional. Tax bills have to be separate measures passed by the Finance committee in the House rather than the Appropriations committee. Del. M. Kirkland Cox, R-Colonial Heights. "I think this forever discredits the practice of trying to put tax increases in the budget." This compromise comes approximately 96 days after the close of the regular session. The budget agreement will be submitted for gubernatorial review and legislative reconsideration of vetoes and amendments by June 30.

Highlights of the concord include no tax increases, no new debt, full Death Tax Repeal, $9.4 billion in transportation spending for the biennium with an additional $339 million to be allocated later in special session. There will also be $200 million in funding for Chesapeake Bay clean up. The Assembly is committing funds for a 300-bed facility for Virginia's Civil Commitment Program to assist in the recent legislative crack-downs on Sexually Violent Predators. State Employee, Sheriffs Deputy, and College Faculty will receive pay raises of 4% increase in FY07 and 3% increase in FY08 along with funding for state-portion of pay increase for public school teachers equal to 4% for FY07 and 1.5% for FY08.

Ironically, the long awaited budget agreement comes on the same day Secretary of Finance Jody Wagner released her monthly state financial report. "Our Virginia economy is remarkable. Joblessness is at new lows and state revenues are nearly 10% more than they were at this point last year. Clearly this was not the time to raise taxes. Let's reward small businesses and working people rather than penalize them with higher taxes," Peace said.

Total general fund revenue grew 18.1 percent in May. Strong growth in individual withholding taxes and extraordinary growth in individual nonwithholding taxes offset weak collections in sales and use taxes, recordation taxes, and corporate income taxes. On a year-to-date basis, total revenue has grown 10.3 percent. Fiscal year 2006 revenues are overstated on an annual basis because revenue losses from the reduced Accelerated Sales Tax program and the reduction on the sales tax on food that will occur in the last month of this fiscal year are not reflected in collections to date. Accounting for these known revenue losses, total general fund revenues are increasing at 8.5% -- ahead of the annual 7.4% forecast.[1] --------------------------------------------------------------------------------

[1] Secretary Jody Wagner's May revenue report to the Governor, June 16, 2006